How Will the Fed Impact the US Dollar, Stocks, and Gold?

Analyst Chat Talking Points:

• Markets are expecting a 75-bps rate hike at the November Federal Reserve meeting.
• However, traders may be more concerned with what the FOMC signals will come in December and thereafter.
• Live coverage of the November Fed meeting begins on Wednesday, November 2 at 13:45 EDT/17:45 GMT.

The November Federal Reserve meeting is around the corner and markets are heavily speculating on another big rate hike – a remarkable situation given the US S&P 500’s climb these past few weeks.

Although Federal Reserve policymakers have been in a communications blackout window for the past week-plus, there was a noticeable shift in tone in mid-October: several FOMC members began to hint that it may be necessary to signal deceleration of rate hikes over the coming months.

And therein lies the importance of the November Fed meeting: not where interest rates are headed in the short-term, as markets are leaning heavily towards a 75-bps rate hike this week (88% chance per Fed funds futures, 100% chance per Eurodollar spreads); instead, when will the FOMC slowdown the pace of rate hikes and where will the Fed’s main rate peak in 2023?

Absent a new Summary of Economic Projections, these considerations will likely be discussed in the Fed’s policy statement, and more importantly, in Fed Chair Jerome Powell’s press conference on Wednesday.

Chief Strategist John Kicklighter’s FOMC scenario analysis table can be seen below:

How will the US Dollar, stocks, and gold prices respond to the November Federal Reserve rate decision? Chief Strategist John Kicklighter and Senior Strategist Christopher Vecchio, CFA discuss in this week’s DailyFX Analyst Chat.

— Written by John Kicklighter, Chief Strategist and Christopher Vecchio, CFA, Senior Strategists